CMS nominee set up Indiana’s unusual Medicaid expansion

A decade ago, when Indiana had one of the lowest rates of health insurance coverage in the nation, then-Gov. Mitch Daniels (R) turned to a health policy consultant named Seema Verma to help insure more of the state’s poor and working poor.

Verma’s approach to expanding the state’s Medicaid program was unusual and somewhat controversial. In return for significant choice in their health coverage and enhanced benefits, the plan required many of the state’s poorest residents to contribute a few dollars into health savings accounts, then purchase their own insurance with help from the state. The idea was to make sure that the newly covered patients had some skin in the game when they made their health-care decisions.

“This structure melds two themes of American society that typically collide in our healthcare system, rugged individualism and the Judeo Christian ethic,” Verma and Mitchell Roob, then-secretary of Indiana’s Family and Social Services Administration, wrote on the Health Affairs blog in 2008.

Verma’s role in the project earned her considerable influence in state government for a private contractor (she had her own office at the capital) and earned millions of dollars for her small Indianapolis-based firm, SVC, according to the Indianapolis Star. Since then, she has helped other states, including Michigan, Tennessee and Iowa, seek or adopt similar plans and helped negotiate a retooled version, known as Healthy Indiana Plan 2.0, or HIP, with the Obama administration’s Centers for Medicaid and Medicare Services (CMS).

Now Verma is heading to Washington to run that agency, where some expect she will try to demonstrate that her ideas can work on a national level. She will be working with Indiana Gov. Mike Pence, the vice president-elect, who also bargained with the federal government when his state was seeking federal approval for the newest version of the plan.

“I think you will see the trend of the federal government turning toward the Indiana HIP plan,” said former state senator Patricia Miller, a Republican who said she has not spoken with Verma or Pence about the subject.

If she is confirmed, Verma will oversee an agency that touches 125 million Americans in some way. CMS distributed $347.5 billion in Medicaid payments and $647.6 billion in Medicare payments in 2015.

Miller and an official in Michigan, where Verma also consulted on a plan that requires contributions from poor recipients, described Verma as extremely well versed in the arcane details of putting together such a project, including the rules imposed by Washington. Verma advised the state on monitoring, compliance, beneficiaries, vendors and other matters.

“She worked all the numbers. She worked all the language. She told us what the feds said we could and couldn’t do,” said Miller, who carried the bills for both versions of the Indiana plan before retiring from state government this year.

Verma has shown an inclination to compromise, not just with the federal government but in setting up her initial program. “We were able to pass Medicaid reform in Indiana because, while we certainly had our own philosophy and priorities, we made a point of listening to the concerns of all stakeholders and responding . . . even when it involved making changes to our plan,” she and Roob wrote.

Indiana generally scores low in most measures of public health. In 2006, when Verma and others began work on the Medicaid expansion, it was 33rd by a ranking of healthiest states, with high levels of obesity and a disproportionate number of smokers. In 2015, it was 41st in the survey, which is compiled by the American Public Health Association and the United Health Foundation.

Hundreds of thousands of people are now newly insured under the Indiana program, according to a consultant hired by the state to evaluate the first year of HIP 2.0. More than 90 percent of people in one part of the plan made their contributions to the health savings accounts, and large majorities said they would be willing to pay a few dollars more to retain the benefits they received, according to the report by the Lewin Group.

“A majority of survey respondents (80 percent) were either very satisfied or somewhat satisfied with their experience with HIP 2.0,” the consultant wrote.

But a study of adding premiums or cost-sharing to Medicaid programs by the Kaiser Family Foundation found that they largely “act as barriers to obtaining and maintaining coverage for low-income groups.”

While small co-payments do prevent many people from seeking unnecessary care or from going to an emergency room for a non-urgent issue, they can keep the poorest people from buying drugs or other health-care needs, said MaryBeth Musumeci, associate director for the Kaiser Commission on Medicaid and the Uninsured.

“If you’re talking about someone whose total income is $100 a month or $200 a month or is homeless, that is when it becomes particularly burdensome,” she said.

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Lenny BernsteinLenny Bernstein covers health and medicine. He started as an editor on The Washington Post’s National desk in 2000 and has worked in Metro and Sports. Follow

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